About the Chair
The Chair in Public Finance (CPF) was established in 2011 at Victoria University, with sponsorship from the University, three New Zealand government departments (Inland Revenue, Ministry for Social Development and The Treasury) and accountancy firm PricewaterhouseCoopers. The New Zealand Productivity Commission came on board in October 2015 as an additional sponsor. It aims to build up expertise in the area of public finance (broadly defined) and to promote research, debate, policy analysis and advice on public finance matters.
The Chair is located in the School of Accounting and Commercial Law, reports to the CPF Advisory Board and also work collaboratively with researchers in Victoria University's Taxation Research Interest Group, the Centre for Accounting, Governance and Taxation Research, the School of Economics & Finance and the School of Government. A key role of the Chair is to strengthen collaboration between the University and the public and private sectors on research and policy issues in public finance.
Key areas of public finance that the Chair seeks to cover include:
- Sustainability of fiscal policy (e.g. superannuation funding; fiscal implications of an ageing population)
- Economics of government expenditure programmes
- Distributional (inequality/poverty) implications of fiscal policy
- Personal and corporate income taxation
- Taxation and economic behaviour
- Roles of fiscal policy in macroeconomic stabilisation
- Fiscal policy and long-run growth
- Economics of public debt
- Implications for NZ public finance of global developments in public debt and financial issues
Research on these topics focuses both on broad conceptual, empirical and policy issues and on specific applications to New Zealand public finance and social welfare policy debates.
The Chair in Public Finance is supported by an Advisory Board which includes senior representatives from the University, partner and sponsoring organisations. The role of the Board is to advise and support:
1. The research work programme of the Chair;
2. Links with key stakeholders;
3. Policy and public engagement initiatives;
4. The financial underpinning of the Chair.
The CPF reports on a regular basis to the Advisory Board on the research, public and executive education and other matters relevant to the work programme of the Chair. The Board consists of the following members:
- Mr Gerald Minnee, The Treasury (Advisory Board Chair)
- Mr Richard Forgan, Partner, Finance and Economics, PwC
- Dr Matt Benge, Chief Economist, Inland Revenue
- Dr David Rea, Principal Adviser, Ministry of Social Development
- Mr Paul Conway, Director - Economics & Research, New Zealand Productivity Commission
- Professor Ian O. Williamson, Pro Vice-Chancellor and Dean, Victoria Business School
- Professor Ian Eggleton, Head of the School of Accounting and Commercial Law
- Associate Professor Jack Robles, Head of the School of Economics and Finance
- Professor Girol Karacaoglu, Head of the School of Government
The field of public finance is usually defined as the study of the taxation, spending and deficit activities of government. The 4th Edition of Jonathan Gruber's public finance text currently summarises public finance as answering four key questions:
1. When should the government intervene in the economy?
2. How might the government intervene?
3. What is the effect of those interventions on economic outcomes?
4. Why do governments choose to intervene in the way that they do?" Jonathan Gruber, Public Finance and Public Policy, Worth Publishers, 2013
An alternative three-way classification of the role of government in the economy was proposed by Richard Musgrave, who suggested that government activities could usefully be thought of as having effects on: "(1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization.”
Often regarded as the godfather of the economics of public finance, Richard Musgrave was an economics professor at Harvard University for many years. He was one of the first to bring economic analysis on the subject together with his 1959 book The Theory of Public Finance: A Study in Public Economy. In his (1960) review of the book, James Buchanan (subsequently an Economics Nobel Laureate for his work on Public Choice) described it as ‘the first English-language treatise in the field’). Many of Musgrave’s contributions to the field of public finance were foundational and his 1973 textbook with wife, Peggy Musgrave, Public Finance in Theory and Practice, quickly became the standard reference for both students and researchers. Richard Musgrave was also one of the first economists to bring the insights of public finance into the research on economic growth and development with his book Fiscal Systems in 1969.
For many economists the term 'public finance' is now synonymous with 'public economics'. The study of the political economy of governments and their agencies – sometimes labelled ‘Public Choice’ – is also often regarded as part of ‘public finance’. A key focus of the economics of public finance is the impact of governments on the behaviour of the private sector – whether as individuals, taxpayers, consumers, voters, producers (firms) or investors. This includes both ‘positive’ economic analysis and evidence (the ‘what is?’ questions) and ‘normative’ economic analysis (the ‘what should be?’ questions). Creedy (1998)* provides an interesting ‘history of thought’ perspective on public finance and its relationship to economics.
However 'public finance' also covers wider issues beyond economics including Public Finance Management, and Accounting. Especially within the study of taxation, the disciplines of Accounting and Law are just as prominent, if not more so, than Economics. Public finance or tax accounting covers issues such as the relationship between accounting standards and the determination of taxable income, accounting practices in the public sector while issues of tax law are ubiquitous to any discussion of tax settings and policy.
The Victoria University Tax Research Interest Group includes economists, accountants, lawyers and researchers from other disciplines working in areas such as public sector governance and public policy.
* Creedy, J. (1998) The History of Economic Analysis, Edward Elgar Publishing; chapter 8 - ‘Public Finance’.